Radial Energy Inks LOI to Acquire Stake in Bosques Block in Colombia
Radial Energy has executed a Letter of Intent with Maxim Well Services Ltd. to acquire rights to explore and develop oil reserves and production on the 9,000 hectare (22,239 acre) "Bosques Block" located in the prolific Middle Magdalena Valley of Colombia.
The Company has acquired a 20.0% working interest in the block in return for 2.2 million dollars to be paid in stages beginning after the execution of a joint operating agreement (JOA), which is expected to be signed within 45 days. In addition, the company is entitled to 33.3% of the revenues from the production of oil following the reactivation of two wells until payout of 1.5 million dollars of the original investment.
The concession is described as an "Exploration and Production Area" with approximately 3,000 hectares within the block already designated as "commercial." According to Maxim, the wells have produced 1.08 million barrels and the Company believes that 2.2 to 3.8 million barrels remain to be recovered based on expected oil recovery factors for the Tertiary reservoir. The Company and its new partners intend to reactivate the wells by workovers of the existing zones and by perforating new intervals in the Tertiary formations with higher density perforations. Maxim's internal estimates show combined producing rates after reactivation are 300-400 barrels of oil per day.
The field was discovered in 1957 by Shell Oil. Nine (9) total wells were drilled on the block. Several of the wells tested oil and/or had shows of oil in the Tertiary formations.
The Company has engaged Gustavson and Associates to review the asset and provide a reserve report and assessment of the property. Maxim is transferring all information and data regarding the block to Gustavson and will be sending a team to Gustavson's offices in Boulder within one week to assist in this work.
Company President, G. Leigh Lyons, states, "We are pleased to continue our strategy for Latin America, and especially pleased to enter into Colombia with the acquisition of such a high potential area. The Bosques Block not only offers early cash flow opportunities but also displays tremendous exploration opportunities in the Tertiary and Cretaceous formations. The Cretaceous targets in particular are very exciting, seismically-defined closures in an oil and gas rich basin, famous for having one of the most prolific oil source rocks in the world (La Luna). The Cretaceous play has gained momentum with a discovery well drilled by Ecopetrol to the northeast of our block last year with an estimated 34 million barrels of high quality oil recoverable."
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